OVERVIEW:No more shell games for brewers and distillers requiring the selling of tours to allow patrons to taste the latest and greatest brew or spirit. The new law allows for these businesses to engage in the limited sale of Malt Beverages and Distilled Spirits directly to consumers both for on and off-premise consumption. It also allows traditional breweries and distilleries to open a restaurant or tavern in their existing premises.

​LIMITATIONS:

]]>Thu, 27 Jul 2017 20:43:43 GMThttp://www.garestaurants.org/legal-knowledge-blog/website-accessibility-lawsuits-under-americans-with-disabilities-act-on-the-riseSource: Jackson Lewis​For years, lawsuits under Title III of the Americans with Disabilities Act concerning places of public accommodation were confined to brick-and-mortar physical barriers, such has steps, excessive slopes in parking lots, and routes that were too narrow for individuals in wheelchairs to use. Now, in the e-commerce age, lawsuits complaining that businesses websites are not accessible to vision-impaired users in violation of Title III are on the rise.

Title III Title III of the American with Disabilities Act prohibits discrimination against persons with disabilities in places of public accommodation and commercial facilities. Practically all types of businesses that serve the public are covered by Title III. These include restaurants, hotels, theaters, convention centers, doctors’ offices, retail stores, museums, libraries, private schools, health spas, and day care centers. This is the case regardless of the size of the business and the age of the building the business occupies. Among the affirmative steps Title III requires of a place of public accommodation is the making of “reasonable modifications” to its business policies and procedures when necessary to serve customers with disabilities. There are few exceptions to this rule.

Websites While the ADA was enacted before the internet as we know it today existed, most courts to have addressed the issue have held that websites are covered under Title III and must be accessible to disabled users. Rules, however, let alone clear rules, on how to make websites accessible to avoid violating Title III have yet to be established. For instance, the courts are divided over whether all commercial websites are subject to the ADA or just websites associated with brick-and-mortar businesses must be ADA-compliant. Under the Obama Administration, the Department of Justice took the broader position, but it did not issue regulations providing specific guidance to businesses. Such regulations are expected in 2018 from the Trump Administration. Meanwhile, as noted in the Los Angeles Times, millions of businesses with websites have the worst of both worlds: mandates without directions.

Risks Few businesses understand the potential legal risks of website accessibility until they are sued. Just a few years ago, such lawsuits were uncommon. According to the federal court dockets, more than 260 website accessibility lawsuits were filed in 2016. Significantly more cases likely will be filed in 2017. The retail and hospitality industries, including restaurants, have been the main targets of website accessibility lawsuits.

Court Decisions Businesses involved in these lawsuits have raised various legal arguments in order to dismiss these cases at the earliest possible stage. These arguments have included plaintiff’s lack of standing to the bring the lawsuit, websites are not covered under Title III, there is no legal standard under Title III to achieve website accessibility, the case is moot because the business is already taking steps to make the website accessible, the lawsuit should be dismissed in light of current rulemaking by the Department of Justice on the issue, and imposing liability violates the business’s due process rights. With some exceptions, motions to dismiss such lawsuits based on these legal arguments have not been successful.

To the extent that businesses are considering whether to settle or litigate these cases, court decisions denying summary dismissal of lawsuits might embolden the filing of more of these cases. Indeed, the New York Post has reported on an alarming example of one plaintiff’s attorney cashing in on website accessibility lawsuits.​Takeaway Businesses must understand that websites can create legal risk under the ADA. To find out where your website stands on compliance, run an accessibility scan of the webpages using a free on-line tool, such as www.wave.webaim.org. The report will show areas of the webpage that may not be accessible and recommend a solution.Jackson Lewis attorneys have significant experience in defending and resolving website accessibility lawsuits, as well as providing preventive advice and counsel to businesses to reduce or eliminate legal risk under Title III involving their websites. Please contact a Jackson Lewis attorney with any questions.

Surviving an alcohol license inspection in Georgia can seem daunting. Most business owners have a hard enough time just making their target profits without the additional burden of deciphering the sometimes archaic alcohol laws, rules and regulations. To help, we’ve put together a checklist that highlights the most common issues you might face:

Licenses and Signage Must Be Conspicuously Posted: Applies to alcohol and business licenses, health permits, and other DOR specific signage (pregnancy warnings and the prohibition against sales to minors).

ID Checking: Compliance with alcohol (and tobacco) sales laws is often tested by law enforcement utilizing underage operatives who attempt to purchase the product either with their own Under 21 ID or by stating that they don’t have their ID. A sale by your employee will often result in a suspension/revocation of your alcohol license and significant fines.

Proper and Current Sales Permits: Although not required by the state, some local jurisdictions mandate that employees obtain an alcohol sales permit. Local inspections often check to make sure the necessary permits have been obtained and are current.

Employee Lists: Some local jurisdictions updated lists of employees to be provided at specified intervals. Proof of compliance should be maintained on the premises.

Training Records: There are no mandatory state training requirements; however, they do exist in many local jurisdictions. These requirements often include provisions regarding the subject matter of training, mandatory refresher training, and proof of compliance. Make sure you know what those requirements are for your local jurisdiction and keep records of compliance.

Copies of Alcohol Invoices: Keep these accessible onsite for at least 3 years. Remember, all alcohol on your premises must be purchased from a wholesaler, and never purchased or “borrowed” from a liquor store, grocery store, or other retailer or location. Violations could result in fines, suspensions and/or confiscation of your alcohol inventory.

Nothing Goes into a Bottle of Distilled Spirits: Everyone knows that you can’t put a cheaper brand of alcohol into a more expensive brand’s bottle. However, it is also illegal to “marry” bottles of the same brand and type of alcohol. Technically, it’s actually illegal to put anything into a distilled spirits bottle (including using it to pre-mix cocktails or even as a flower vase).

Alcohol in the Kitchen: You must have a license for every type of alcohol that can be found anywhere on the premises. For example, if you have a beer and wine license, you can’t have a bottle of bourbon in the kitchen that’s used solely for cooking.

Pay Your Taxes: In addition to monthly state taxes, don’t forget to pay the local excise taxes (typically due on the 20th of each month).

Know your Happy Hour & Merlot to Go Laws: Many local jurisdictions have unique happy hour laws relating to promotions and drink specials. Failure to comply can result in suspension/revocation of an alcohol license and/or fines.

No Open Tabs: All alcohol sales must be simultaneous; i.e. the customer must pay before they leave (no carry over to another day).

Mini-bottles Prohibited: You may not purchase or possess distilled spirits in excess of 10% ABV in containers less than 750 mL, unless the product is not sold in larger containers. In that case, you may purchase a container of that product that is not smaller than 375 mL.

Cigars/Cigarettes/Other Tobacco: If you sell tobacco products, make sure all tobacco taxes are paid, keep invoices, display your tobacco license, and post the DOR required tobacco warning signs. In addition, make sure that all tobacco brands you carry are in compliance with federal guide lines.

Pool Tables, Games and More: Coin Operated Amusement Machines (COAM) must be licensed with the Georgia Lottery Corporation. If you are not the license holder, you must have a copy of the Master license from the company/owner and all machines must have a specified decal. There is also a warning sign from the lottery that you must post about gambling. In addition, you cannot pay cash out for any COAM at your location.

The key to surviving an alcohol inspection is knowledge of the rules, regulations, and laws that govern your business; however, the myriad of laws in Georgia can make this difficult. When in doubt, call your local jurisdiction or alcohol licensing firm.

Michele L. Stumpe, Esq. is a partner at the law firm Taylor English Duma LLP and has been representing and assisting businesses and alcohol retailers for over 21 years. You may contact her at mstumpe@taylorenglish.com or 678-336-7160.

Tiffanie Pittington is a Senior Licensing and Permits Specialist at Taylor English Duma LLP. Prior to joining the Restaurant, Food and Beverage, and Licensing Practice Group, Pittington spent more than 14 years in the Georgia Department of Revenue Alcohol & Tobacco Division. You may reach her at tpittington@taylorenglish.com or 678-336-7166.

Losing the ability to sell alcohol or becoming the subject of an alcohol sales based lawsuit can be devastating for any restaurant. Implementing an effective alcohol service program is the best way to protect your business. Every good program starts with an easy to understand written policy, incorporates high-quality comprehensive training, and ties it all together with proactive monitoring and enforcement. Here are some tips for implementation in your restaurant:​

Written Policies

CLEAR and COMPREHENSIVE. Don’t limit yourself to a few generalized paragraphs in your employee handbook with vague prohibitions to “ID everyone who appears to be under” a certain age and “refuse alcohol sales to intoxicated patrons.” These types of ambiguities can do more harm than good. For example, the “appears to be” language gives employees an automatic excuse that the patron “appeared” to them to be of proper age. A better policy would be “ID any patron who is under” a certain age – preferably at least 40 which is the industry standard.

RED or VERTICAL means stop. The best policy is to refuse to sell alcohol to any patron attempting to use a “minor’s” ID. Most failed compliance checks occur after the employee requests, and is shown, a minor’s ID. Employees need to be trained to recognize the distinguishing factors of a minor’s ID and to refuse to sell.

Incorporate STATE and LOCAL LAWS. Alcohol license suspensions and revocations frequently occur because management isn’t familiar with the legal restrictions (such as hours of sale, employee training or permit requirements and promotional prohibitions). Knowledge of the laws by all staff and managers is an important linchpin of avoiding liability.

Put your POLICY in WRITING and have employees SIGN it. This avoids confusion and provides an objective basis for disciplining employees. It also shows that the restaurant exercised reasonable care to implement rules regarding alcohol sales and to notify its employees of such.

Training

TRAIN employees on responsible alcohol sales and service before allowing them to engage in alcohol sales.

Engage MANAGERS in the alcohol training. Management involvement from the outset increases monitoring and enforcement.

Choose the RIGHT TRAINING program, one that includes comprehensive coverage of:

State and local laws (such as merlot to go and permit requirements, happy hour restrictions, BYOB regulations, etc.);

ID checking procedures including recognition of fake IDs, common strategies by minors attempting to obtain alcohol, recognition of minor’s IDs and proper protocol for refusing sales;

Recognizing signs of intoxication, methodology for preventing intoxication and proper procedures for dealing with intoxicated customers; and

Handling difficult customers and difficult situations.

TEST employee knowledge of training and policies. Include multiple forms of questioning and a sufficient number of questions to insure complete understanding. Review and address any erroneous answers before the employee is permitted to serve or sell alcoholic beverages.

MONITOR employee compliance with the company’s policies to expose risks and provide an opportunity to correct problems before they become a liability.

Some effective means of monitoring and compliance include:

Regular reminders and refresher training;

Mystery Shopping (insure compliance with Georgia law by only using shoppers who are 21 and older);

Manager review programs;

Incentives to reward responsible employees; and

Disciplinary measures for employees who do not follow company policy.

By taking a comprehensive approach to all aspects of alcohol compliance (policy, training and monitoring) restaurants can significantly reduce the risks and expense of liability.

About the AuthorLicensed to practice law in Georgia and South Carolina, Michele L. Stumpe, Esq. has been representing and assisting businesses and alcohol retailers for over 21 years. Her experience includes successfully handling multi-million dollar civil dram shop and premises liability lawsuits. In addition, Ms. Stumpe has served as a consultant to various governmental entities, trade organizations, and major corporations and is the author and authorized provider of mandatory responsible alcohol sales training for owners, licensees and servers in multiple jurisdictions throughout the state of Georgia. Stumpe is a partner at the law firm of Taylor English Duma LLP (www.taylorenglish.com). You may contact her at mstumpe@taylorenglish.com or 678-336-7160.

Are you a Naturalized U.S. Citizen, Lawful Permanent Resident, Visa Holder, or an Undocumented Immigrant? We recommend you take the following steps to protect yourself in our current version of America.

The last couple of weeks have reminded immigrants, even naturalized U.S. citizens, that they were not born in the United States. Our office has received countless phone calls, emails, and social media messages from people worrying about what their family’s future in the United States holds.

Most people want to know what they can do now to protect themselves from what promises to be a wave of anti-immigration activity by the federal government. Trump's Executive Order on Interior Enforcement has some provisions that should make most Americans shiver. We recommend the following actions for each of the following groups:

1. Naturalized U.S. citizens. In particular if you have a foreign accent, and you are traveling within 100 miles of any US Border (including the oceans), we strongly recommend carrying with you your US passport, or passport card, or a photocopy of your naturalization certificate. Because of the unpredictability of the current situation, we recommend keeping a photocopy of these documents in a safe place at your home, so that if necessary, someone will have access to it. You may very well need to prove your US Citizenship.

2. Permanent residents. Most people don't know this, but federal law requires that anyone who is NOT a US Citizen is required to carry with them at all times, evidence of their lawful status. You can see that for yourself at 8 USC 1304(e). So, carry your green card with you at all times! You should also keep a photocopy of your green card in a safe place at home so that it can be accessed by someone in case you lose your card and you need it to identify yourself. Don't forget about that 100 mile constitution free zone! You should also renew your green card a full 6 months before expiration. Don't wait! If your green card has expired, renew it now. And, if it is not obvious at this point, you should start the process to naturalize immediately!

3. Lawfully present nonimmigrants (e.g. DACA, U Visa, EADs, Visitors, Students, H1Bs, etc.).Carry with you at all times your Employment Authorization Document, I-94 card, passport with entry stamp, or other proof of lawful presence (see the law above). Carry the original with you and keep a photocopy in a safe place at home, especially if you are within the 100 mile border area (more than 60% of the US population lives in this zone).

4. Undocumented immigrants in the US for more than two years. Keep with you at all times evidence that you have been present for at least two years. Why? Because President Trump just ordered DHS to examine activating a never used provision in immigration law that allows for the immediate removal from the US of anyone who cannot prove they have been here for two years (absent a claim for asylum). We do not know when ICE or CBP might activate the change, but we need to be prepared. Evidence that you might want with you are utility bills, receipts, Facebook posts, mail or any other documentation with your name going back two years, BUT, be very careful of using pay stubs if you have used false documents or information to get your job, as those are prosecutable offenses. Again you should also keep this information at home so that it is accessible to someone who can help you. Keep a photocopy at home. And, make sure you have a family plan in place to call for legal assistance if you fail to return home as usual.

5. Undocumented immigrants in the US for less than two years. The bad news is that you need a plan in place on what will happen to your belongings and your family if you do not return home from work, shopping, or school. Make sure your relatives know they can look for your name on the ICE detainee website. We assume that ICE and CBP will not release you on bond, and that if you have a fear or returning home, you will need to be VERY vocal about letting everyone know if you are detained.

6. Undocumented Immigrants with 10 years in the United States and children. You are eligible for Cancellation of Removal, and release on bond. Begin now to prepare the paperwork you will need to secure a bond, and to prove your case. You can read more about this process here. Don't be caught unprepared!

7. Non-US Citizens (Permanent Residents, Visa Holders, and Undocumented Immigrants) who have a criminal convictions OR are arrested. If you have a criminal conviction, or are even arrested for a crime, ICE has begun to detain people in this category and has released only a very few on bond. If you have relief from removal, you are eligible for bond, but, depending on where you are, you may not be released. Prepare for this by saving money for bond now, and have the paperwork organized so that our attorneys can quickly help seek a bond.

8. Undocumented Immigrants with prior deportation orders. If you have a prior deportation order and have returned to the United States, you are subject to prosecution by the federal government for the crime of reentry after deportation. President Trump has ordered his U.S. Attorneys to increase the number of people charged with this crime. Depending on WHY you were deported (for example a serious criminal offense), you can spend up to five years in federal prison for reentering the US. Again, make your plans now about how you want to deal with this situation. If you have a deportation order and never left, NOW is the time to speak to an immigration attorney and seek advice about your options to reopen your deportation case. ​9. For those Arrested by ICE, especially for the undocumented--Have a plan in place. Decide now who picks up the kids from school/daycare, who will be authorized to do so with the school, who to contact first, have a power of attorney prepared for this. In the last few weeks we have heard of parents being picked up at school bus stops and at work and home while the kids are in school. Once it happens, there is no time to make arrangements.

Also, do your research now into immigration attorneys that you may call in a moment’s notice. Keep their phone number handy and ready for family and friends to use. Or better yet, go see an excellent immigration attorney now and see what options you may have available to you.

We give these warnings because we want people to be prepared NOT scared. Preparation will ensure that your family is protected. Contact us a 404-816-8611 or ckuck@immigration.net or, if you have any questions or concerns regarding your status. ]]>Wed, 08 Feb 2017 18:58:33 GMThttp://www.garestaurants.org/legal-knowledge-blog/tips-for-obtaining-and-maintaining-an-alcohol-license-in-georgia

Many restaurateurs find the alcohol licensing process to be a taxing and laborious process, but advance planning can often reduce many of the issues that applicants and license-holders encounter. While the rules governing alcohol regulation can vary immensely by jurisdiction, below are some general tips.

Alcohol in Georgia is regulated at the state level by the Georgia Department of Revenue and at the local level by the city or county where the restaurant is located. So a restaurant must hold both a state license and a local city or county license in order to purchase and sell alcohol.

When beginning the licensing process, confirm that the premises are suitable for alcohol licensure. As an example, some jurisdictions prohibit licenses from being issued to premises that are too close to schools or churches. Other jurisdictions may impose additional zoning requirements. It is particularly important to look into these issues prior to acquiring a building or entering into a lease. Alternatively, a restaurateur could negotiate a licensing contingency clause under its lease that would allow the tenant to terminate the lease if an unsurmountable licensing issue arises.

A restaurant may need more than just one license from the state and local jurisdictions, as additional licenses can be required for bars, lounges, and patios. The question of who gets the license must also be answered. In some cases it is a corporation or limited liability company. In others, an individual must hold the license. Or sometimes it’s both. In any event, the applicant will want to ensure that all license-holders – and in some cases a company’s owners and management – meet criminal history, tax, and other fitness requirements.

Another consideration is timing. The State of Georgia has made great strides in application processing times by using a temporary alcohol license program during the investigation of an application. But each local jurisdiction has its own set requirements. Sometimes there are hearings that must be attended, and an applicant is at the mercy of a jurisdiction’s hearing schedule. Sometimes advance public notices must be advertised. License applications also often require inspection approvals from the local fire, health, and building departments, so those items should be worked into any grand opening timeline.

Once licenses are issued, there are more requirements than simply preventing alcohol sales to minors. The licenses must be renewed on an annual basis. In some cases new filings are required if the restaurant undergoes an ownership or management change. Some jurisdictions require that employees maintain their own individual pouring permits. Finally, restaurants must adhere to day-to-day regulatory alcohol code compliance by being familiar with practices related to hours of operation, happy hour promotions, carding policies, and others.The world of alcohol regulation is complex – but it is much more manageable if one knows what is required on the front end.​Dan Plevak is an attorney with Taylor, Feil, Harper, Lumsden & Hess PC who specializes in alcohol licensing and regulatory matters.

By: Joe Sullivan at Taylor English Duma LLP​Everyone is a potential restaurant critic thanks to the rise of smartphones. Consequential opinions that were once reserved for the “professionals” at the Atlanta Journal-Constitution are now possible for any person with a grudge and cellphone. The conveniences of modern smartphones permit us to send out pictures of the food we eat, the waiter service we encounter and, often times, how disappointed we are with our overall dining experience via online consumer review websites like Kudzu and Yelp.

Undeniably, one of the most popular targets for these consumer-based online reviews is the restaurant industry. While positive online reviews can many times increase business and revenue for restaurants, negative online reviews can have the very opposite effect. Consequently, a restaurant may face a scenario where its bottom line is being adversely affected by online reviews that may or may not be factual. Many times, a restaurant, like any other business, must decide whether it should pursue formal legal avenues to delete and/or deter such online reviews from increasing in size and scope.

Before engaging in an expensive and time-consuming legal process, here are some factors to consider:

Is the online review factual?As defined in Georgia, “libel is a false and malicious defamation of another, expressed in print, writing, pictures, or signs, tending to injure the reputation of the person and exposing him to public hatred, contempt, or ridicule.” Under Georgia law, the truth will always serve as a legal defense to a claim for defamation (and most other legal claims capable of being asserted in response to an online review). That is because a statement that reflects an opinion, as to which reasonable minds could differ, cannot be proved false.

As a result, a restaurant owner who claims that a published opinion defamed his/her business will generally be unable to carry the applicable burden of proving the essential element of falsity. Still, an opinion can constitute actionable defamation if it can reasonably be interpreted, according to the context of the entire writing in which the opinion appears, to state or imply defamatory facts about a restaurant that are capable of being proved false.

Before contacting an attorney and paying a considerable retainer to initiate a lawsuit, you should first perform the necessary due diligence to ascertain whether the online review has any legitimacy. Talk to your host/hostess to determine if he/she was possibly rude to any patrons upon check-in. Speak with your wait staff to clarify if they may have inadvertently forgotten a table of guests. Confer with your employees to establish if anyone was denied a table for no justifiable reason.

While it can be easy to discount negative reviews as “sour grapes,” sometimes such criticisms expose the ugly truth and may actually serve to address a lingering problem in the way your restaurant operates.

Is the online review an opinion?There are significant protections in Georgia to protect the freedom of speech. Generally, a claim for defamation will require that the individual publishing the online review state, as a “fact,” something that is indisputably untrue (as opposed to a mere opinion that could differ based on the viewpoint of the individual guest). For instance, an online review stating your restaurant’s food quality is not commiserate with the prices being charged will likely be held to constitute an opinion not subject to a lawsuit. However, if the review instead falsely declares that your restaurant misrepresents certain food products or frequently makes fraudulent charges on consumers’ credits cards, it likely constitutes a statement of fact that would subject the publisher to a lawsuit.

Since a claim for defamation will require not only that the online review consists of an untrue statement of fact, but also that the person publishing the review acted with negligence or even malice (i.e., reckless disregard for the truth) in publishing the review, it is very important to consider whether the offending statement(s) can in any way be deemed an opinion as opposed to a statement of fact.

Engage in a cost/benefit analysisHiring an attorney to pursue damages in connection with a negative online review can be expensive. You must determine if the benefits in seeking to remove the offending review and/or to seek damages in connection with that review are outweighed by the potential costs. It is important to note that, more likely than not, your claim will be against the individual actually authoring the online review, as opposed to the website on which that review appears.

If the identity of the publisher cannot be ascertained from the face of the review (and, usually, it is the security of an anonymous review that permits the publisher to be so brazen in their comments), it will be necessary to file a “John Doe” lawsuit and serve subpoenas on the website that hosted the review in an effort to track down the author’s identity. Many times, and after significant time and expense have already been incurred, the individual identified either cannot be affirmatively located or simply does not have the financial wherewithal to satisfy a meaningful judgment. You are then left in the unenviable position of incurring significant time and expense only to be left in virtually the same position you were from the start.

Other optionsWhile not a formal legal option, you can also simply track your restaurant’s online reviews and respond to them in a meaningful yet non-argumentative way. While many consumers rely on such reviews to decide where to spend their money, most restaurant savvy consumers appreciate that online reviews are not always accurate and can result from the sheer resentment a consumer experiences when simply not getting his or her (possibly unreasonable) way.

A simple apology (or even acknowledgement) of the publisher’s concerns, and an explanation of any changes and/or means you have or will implement to address those concerns can many times be more effective (procedurally and financially) then seeking formal legal redress.

Joseph C. Sullivan is a partner at Taylor English Duma LLP (Atlanta), who counsels restaurants and other hospitality businesses in litigation matters. He may be reached at (678) 336-7284 or by email at jsullivan@taylorenglish.com.

The United States District Court for the Eastern District of Texas issued a nationwide emergency injunction effectively preventing the United States Department of Labor (DOL) from enforcing its hotly contested overtime rule.

BRIEF OVERVIEW​The rule, a summary of which is available here, was slated to go into effect on December 1, 2016. A collection of 21 states, however, sued the federal government arguing, among other things, that the DOL was not authorized to create an exemption test that relies solely on a salary level test. While it is true the DOL maintained the salary-basis and "duties" requirement of the three-part overtime exemption test, the Court found that because the salary level was so dramatically increased (from $23,660 to $47,476), the DOL effectively created a "salary only" test for millions of employees. Said the Court,

"[T]his significant increase to the salary level creates essentially a de facto salary-only test. For instance, the [DOL] estimates 4.2 million workers currently ineligible for overtime, and who fall below the minimum salary level, will automatically become eligible under the Final Rule without a change to their duties."

The court found this result "directly in conflict" with the language of the Fair Labor Standards Act, which is what gives the DOL the authority to draft overtime related regulations in the first place.

"The [DOL]'s role is to carry out Congress's intent [outlined in the Fair LaborStandards Act]. If Congress intended the salary requirement to supplant theduties test, then Congress, and not the Department, should make that change."

WHAT NOW?

For now, employers are not required to comply with, or implement the requirements of the rule enjoined by the court.

The court's injunction is for an undetermined period of time but it will likely remain in effect until the case is ultimately decided (possibly at the Supreme Court level). It is worth noting that, while this injunction does not constitute a definitive ruling on the law suit, one of the factors a court considers before granting an injunction is whether the party seeking it has established "a substantial likelihood of success [of the claim] on the merits."

Further, even if this lawsuit ultimately fails and the courts find the DOL actually had authority to draft the regulations in the manner they did, the overtime rule is not entirely out of the woods.

Even before the the 2016 election, Republicans in Congress had signaled their intent to challenge several crucial aspects of the overtime rule. Under President Obama, those challenges would have been significantly more difficult to sustain. President-Elect Trump, however, creates a more cooperative dynamic between the White House and the Republicans who retained control of Congress.

With the injunction now stalling implementation of the overtime rule likely well beyond President-Elect Trump's inauguration, it is entirely possible the rule will be scrappedaltogether.]]>Wed, 23 Nov 2016 17:11:12 GMThttp://www.garestaurants.org/legal-knowledge-blog/texas-court-grants-nationwide-preliminary-injunction-enjoining-department-of-labor-from-implementing-or-enforcing-regulation-raising-salary-level-for-white-collar-exemptionsSource: Jackson Lewis P.C.

When two lawsuits were filed in Texas seeking to block the Department of Labor’s new overtime rule, which more than doubles the required salary level to qualify for the “white collar” exemptions, few predicted the lawsuits would be successful. But the polls were wrong (again). On November 22, 2016, a Texas District Court Judge (an Obama appointee) granted a nationwide preliminary injunction blocking the rule. In a stunning victory for the 21 States and various business groups that brought two separate cases challenging the new overtime rule, the U.S. District Court for the Eastern District of Texas – Sherman Division issued a nationwide preliminary injunction enjoining the DOL from implementing and enforcing the Final Rule, which was set to go into in effect on December 1, 2016.

It is another stinging defeat to the Obama Administration, dismantling one of its signature regulatory achievements. On November 16, 2016, a Texas district court judge issued a permanent injunction blocking the DOL’s “persuader rule,” which required companies to make extensive disclosures regarding efforts to persuade employees not to join a union. And on October 25, 2016, another Texas district court judge issued a nationwide preliminary injunction blocking portions of Fair Pay and Safe Workplaces Final Rule and Guidance (“Fair Pay Rule”), which were set to take effect on October 25, 2016. The Fair Pay Rule would have required certain federal contractors to disclose prior labor violations and invalidated certain arbitration agreements. The latest decision makes a trifecta and is a reminder of the oft-quoted popular saying: “Don’t mess with Texas.”

Final Rule Would Have More Than Doubled the Required Salary Need to Qualify for the ExemptionPresident Barack Obama directed the DOL in March of 2014, more than two years ago, to update and modernize the regulations that govern who qualifies for the white collar exemptions. In response, the DOL issued a proposed rule on July 6, 2015, and a Final Rule on May 23, 2016, after receiving approximately 300,000 comments.

The Final Rule makes four changes to the white collar exemptions:

 It increases the standard salary level for the white collar exemptions from $23,660 to $47,476 — a rate based on the 40th percentile of average salary for full-time workers in the lowest census region. The rate previously had been set at the 20th percentile. It increases the required compensation for the exemption applicable to highly compensated employees, raising that level from $100,000 to $134,004 — a rate set at the 90th percentile for full-time salaried workers in the United States. It provides for automatic increases to the salary levels every three years, instead of requiring separate rulemaking, with rates to be established based on the average salary levels for full-time workers as reported by the Bureau of Labor Statistics. It allows employers to use commissions and other non-discretionary incentive pay to satisfy up to 10% of the salary level for the standard white collar exemptions.

Court’s RulingIn granting the preliminary injunction, the Court focused on the words of the statute—finding nowhere any indication that Congress intended the exemptions for white collar workers to include a salary level requirement, but rather finding the exemptions dependent on the duties of the employees. The Final Rule essentially created a “de facto salary-only test,” and makes approximately 4.2 million workers ineligible for overtime even though their duties might qualify them for the exemption, the Court held in granting the injunction.Under the FLSA, the overtime requirement does not apply to “any employee employed in a bona fide executive, administrative, or professional capacity.” 29 U.S.C. 213(a)(1). The statute itself contains no salary basis or salary level requirement. The salary basis and minimum salary level requirements were added by the Department of Labor through regulations issued shortly after the FLSA was enacted in 1938.

Final Rule Contrary to Congressional Intent and Fails Chevron Step 1

The DOL argued the Court was required to defer to the DOL’s interpretation of the statute and imposition of a salary level requirement because the Congress expressly delegated to the DOL the obligation to “define and delimit” the exemptions “from time to time.” Under the Supreme Court’s seminal decision in Chevron, U.S.A., Inc. v Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984), there is a two-step method for reviewing the validity of regulations. At Chevron Step I, the Court reviews the statute to determine whether the intent of Congress is clear from the terms of the statute. If it is, “that is the end of the matter” as the Court must give effect to the expressed intent of Congress.

The Court held the Final Rule failed at Step 1 of Chevron finding the statute is not ambiguous. Because the statute itself does not define the terms “executive,” “administrative,” and “professional,” the Court turned to contemporary dictionary definitions of those terms at the time the statue was enacted. “After reading the plain meanings together with the statute, it is clear Congress intended the EAP exemption to apply to employees doing actual executive, administrative, and professional duties. In other words, Congress defined the EAP exemption with regard to duties, which does not including a minimum salary level,” the Court held.

In responding to the DOL’s argument that Congress delegated to it the obligation to define the exemptions, the Court held this delegation permits the DOL to define the types of duties that might qualify an employee for an exemption, but “nothing in the EAP exemption indicates that Congress intended the Department to define and delimit with respect to a minimum salary level.” And the elimination of the exemption based solely on the employee’s salary level directly conflicts with Congressional intent, the Court held. “With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.”​Final Rule Also Not Entitled to Deference Under Chevron Step II

The Court also found that even if the statue was ambiguous, the Final Rule still would be invalid and not owed deference because it is not based on a permissible construction of the statute. The salary level was originally set low to screen out the obviously nonexempt employees. But by raising the salary level to $913 per week, the Final Rule creates a “de facto salary-only test.” Congress “did not intend salary to categorically exclude an employee with EAP duties from the exemption,” the Court held.

Automatic Updating Unlawful Too

In issuing the preliminary injunction, the Court held the DOL also did not have the authority to implement the automatic updating mechanism, which would have increased the salary level every three years without separate rulemaking.

Nationwide Preliminary Injunction Issued

The Court issued a nationwide preliminary injunction, enjoining the DOL from “implementing and enforcing” the regulations. The Court rejected the request to limit the injunction only to states that showed irreparable harm. “A nationwide injunction protects both employees and employers from being subject to different EAP exemptions based on location,” the Court held, noting that other courts in Texas have recently issued nationwide injunctions. The Court further found that there was a likelihood of irreparable harm in absence of the preliminary injunction given the significant cost in complying with the rule and the balance of the hardships favored the State Plaintiffs since the injunction delays the regulations implementation and “preserves the status quo.”

Now What??

Many Employers Have Already Communicated the Change to Employees

For many employers, the preliminary injunction ruling may be too late. Employers have spent months preparing for the changes to the white collar exemptions, identifying workers affected by the Final Rule, determining whether to increase their salaries to comply or reclassify them as hourly workers, and communicating those changes to their employees. In light of the December 1 deadline (which, for most employers, falls within a pay period), employers have already communicated the change to employees. If an employer already has notified an employee of a salary increase effective December 1 or already made the change, it may be too difficult to undo that change or communicate that the change will not be made.

Should Employer Scrap Plans to Reclassify Workers?

For employers who have yet to communicate the change, the ruling may allow a sigh of relief, eliminating the obligation to increase wages for some employees in order to continue to meet the exemption requirements or scrapping plans to reclassify workers from salaried exempt to hourly non-exempt. But employers beware: the preliminary injunction decision will be appealed to the Fifth Circuit Court of Appeals. If the decision is reversed by the Fifth Circuit, and the employer has not been in compliance on the December 1 effective date, a thorny question arises: whether the existence of the preliminary injunction precludes any liability between the December 1, 2016, effective date and the date the Court of Appeals issues its decision.

District courts are grappling with just this question in the context of another DOL regulation that was invalidated by a district court, but later reversed on appeal. That regulation concerned the availability of the companionship exemption to home healthcare workers employed by third parties. A 1975 regulation held they were exempt, but in 2013, the DOL issued a new regulation removing the exemption. In December 2014, the Home Care Association of America sued the DOL in the District Court for the District of Columbia, seeking to enjoin enforcement of the rule, and the district court vacated the rule. But approximately eight months later, the D.C. Circuit Court of Appeals reversed the district court

decision. Some employers, relying on the district court’s injunction, did not pay overtime. When the D.C. Circuit ruled, reversing the district court’s decision, employees sued for overtime for the eight-month period between the district court’s decision and the circuit reversal. One district court in the Southern District of Ohio held the employer is not liable during the period the injunction was in place (Bangoy v. Total Homecare Solutions, LLC, No. 15-575) (S.D. Ohio. Dec. 21, 2015), but a district court in New York held just the opposite, and recently granted a request for an interlocutory appeal to the Second Circuit Court of Appeals. See Kinhead v. Humana, Inc., 2016 U.S. Dist. LEXIS 143000 (D. Conn. Oct. 13, 2016) (certifying for interlocutory appeal question of whether employer can be liable during period home care regulation was invalidated by district court and noting conflict).

What Impact Could The Trump Administration Have on the Final Rule?

Since the DOL first announced its proposed rule, various bills have been introduced in Congress to block the rule entirely, delay its implementation, or stagger the increases over time. But President Obama would veto any of these bills, even if they were passed. But a Trump Administration might view such legislation differently, and President-elect Trump could sign such legislation if it is passed by the next Congress.

If an appeal from the district court’s decision is still pending when such legislation is passed, the appeal may become moot, particularly where the legislation invalidates the rule from the proposed effective date.

The Trump Administration also might direct the DOL to abandon the appeal if it is still pending at the presidential inauguration.

The DOL under a Trump Administration also might rescind the Final Rule, but would need to follow the procedures set forth in the Administrative Procedure Act, a much longer and more difficult process.

State law Considerations

Employers will also have consider how this ruling affects the white collar exemptions under state law. Some states do not have overtime laws; others incorporate the FLSA; other incorporate the FLSA but with higher salary requirements; and others have their own exemptions and salary levels without reference to the FLSA.​We will continue to follow this case. Please contact Jeffrey W. Brecher, Eric Magnus, Paul DeCamp, or the Jackson Lewis attorney with whom you work with questions about the decision and the compliance with the Final Rule.]]>Wed, 23 Nov 2016 17:07:02 GMThttp://www.garestaurants.org/legal-knowledge-blog/federal-court-enjoins-new-overtime-and-salary-rulesBy Lisa F. Harper of Taylor, Feil, Harper, Lumsden & Hess P.C.

​Today, the a Judge in the District Court for the Eastern District of Texassaid no to the power of the Department of Labor (“DOL”) to implement theregulations which would have, among other things, double the salary required to be paid to an employee in order to be exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (“FLSA”) that were to go into effect on December 1, 2016.

The lawsuit (State of Nevada, et al. v. United States Department of Labor, 4:16-CV-00731; (E.D. Tex. November 22, 2016)) was filed by a number of states, Georgia included, to enjoin the DOL December 1, 2016 regulatory actions. Federal Judge Mazzant entered a preliminary injunction prohibiting implementation of the DOL’s overtime rules. In doing so, Judge Mazzant stated that,​The State Plaintiffs have established a prima facie case that the Department’s salary level under the Final Rule and the automatic updating mechanism are without statutory authority.

Thus, although the injunction is preliminary and not permanent it certainly sounds like it will be permanent and is the law right now in any event.​]]>